Regulating California Health Insurance Rates – AB52
On Thursday, June 2, 2011 the power to reject rate hikes was given to state regulators by Democrats in the California Assembly after a mass-exodus from the chamber by protesting Republican lawmakers. With the Assembly voting 42 to 1 to approve the bill it will now go before the Senate.
Although other kinds of insurance are currently regulated by the commissioner, Bill AB52 will now include health insurance. This will permit either the State insurance commissioner or the Department of Managed Health Care to reject hikes in health insurance rates should they be suspected of being extravagant, unnecessary or discriminatory. The bill will also require that specific information be submitted to regulators for review. The hope is that these regulators will pay close attention to scientific review as well as public opinion polls before they make any final rulings.
According to data released by the Kaiser Family Foundation California represents 11 percent of the market of residents with health insurance provided by an employer and 15 percent of the market of residents with individual coverage, making this one of the largest markets in the US for insurers.
Thirty-four other states have already implemented similar standards to protect the public from the rising costs of health insurance. Democrat and Insurance Commissioner Dave Jones states, “As a member for the Assembly, I introduced this legislation three times and the need for it has only grown, as health insurance continues to become unaffordable for more and more Californians.”
The California Association of Health Plans argues that the increase in chronic disease and the need for modern technology are the motivating factors behind increases in health care spending and is concerned that AB52 applies only to the premiums and not to the elemental cost pressures. Although the public may not agree, large rate increases may still be deemed necessary by regulators if actuarial science shows the need for more funds.
The GOP has argued that Democrats have helped magnify the cost of care in California with bills that require new kinds of coverage. “Our focus should be making health care more affordable for employers and workers alike, not increasing costs that will drive even more jobs and opportunity away and make our health care problems much worse,” says Republican Assemblyman Dan Logue.
It is argued that AB52 could cost the state up to $30 million per year to administer rate regulation which could add to business costs for both insurers and customers. Among those opposed to the bill are groups of businesses and the California Medical Association, however the only one to vote against the measure on the Assembly floor was Assemblyman Richard Pan Phd., D-Sacramento.
Having been denied a recess for caucus just prior to the reading of the bill, Republican lawmakers left the room for approximately thirty minutes. Upon returning, their votes were added to the tally. After voting on the floor, lawmakers are permitted to modify their votes and by the end of Thursday afternoon the tally stood at 45-28.
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